The National Association of Credit Management reported that May’s combined Credit Managers’ Index (CMI) experienced a gain of nearly three points to a score of 56.6, the best reading since May 2017. The latest score is the first increase in three consecutive months and marks the most substantial month-over-month leap from April to May in more than a decade. Dollar collections were among the favorable factors restored to promising heights in the monthly credit and collections survey, following the overall combined score’s two-point plummet in April.

When April’s CMI revealed disappointing findings, particularly in all-around dollar collections, NACM economist Chris Kuehl said warning lights started blinking and encouraged credit managers to proceed with caution. Combined dollar collections dropped significantly to 46.7 in April, dragging down the favorable factors’ score to the low 60s, while the majority of unfavorables also declined. In May, the combined dollar collections skyrocketed to 62.5, the highest score since February. Overall favorables and unfavorables scored 65.7 and 50.6, respectively, the latter climbing back into expansion territory.

“Lately, there have been more than a few sighs of relief heard as people try to review the state of the current economy,” Kuehl said. “Some of the indicators that attract the most attention have stuttered and pointed to big declines only to stage a rebound later. It seems that April was an anomaly when it came to how creditors were choosing to handle their obligations.”

Independently, the manufacturing and service sectors each rose by roughly three points. The manufacturing CMI scored 57, at least 0.8 points higher than any other score since May 2017. In addition to dollar collections, sales and new credit applications also increased and the amount of credit extended showed a modest gain, bringing favorable factors to 65.5.

Unfavorable factors bumped up to 51.4, with four of the six factors improving, including dollar amount beyond terms, bankruptcy filings and credit application rejections. However, disputes remained an issue for respondents, and dollar amount of customer deductions was unchanged.

Improvement was also noticeable in the service sector (56.3). Compared to manufacturing, favorable factors were slightly higher at 65.8 and unfavorables were ahead by a half-point. Dollar collections left contraction territory to climb into the low 60s, but sales received the most significant reading at 69.6, almost reaching September’s 69.7.

Despite some initial boosts, the service sector’s unfavorable factors are still on the cusp of expansion at 49.9. Dollar amount of customer deductions gained the most from May’s findings, followed by bankruptcy filings and disputes. Credit application rejections and accounts placed for collection worsened, leaving dollar amount of customer deductions and bankruptcy filings the only factors above 50.

“The data matches pretty well with what had been observed with manufacturing but with a few unique trends,” Kuehl said. “The ‘sales’ category was strong with services as well, despite the slow pace of retail activity. The other service sectors more than made up for this.”